Transitional MODVAT credit under Rule 57H is limited to duty actually paid on pre-declaration stock, not higher notional credit.

Rule 57H transitional credit under the Central Excise MODVAT scheme was confined to the duty actually paid on inputs lying in stock before the declaration under Rule 57G was acknowledged. The text distinguishes this from Rule 57B, which granted higher notional credit for specified exempt-sector inputs to assessees already operating within the MODVAT scheme. For pre-declaration stock, the operative relief under Rule 57H was limited to actual duty-paid credit, and the higher notional credit under Rule 57B was not available.

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Issues: Whether higher notional credit under Rule 57B of the Central Excise Rules, 1944 could be granted in respect of inputs lying in stock before filing the declaration under Rule 57G, or whether credit under Rule 57H was confined to the duty actually paid on such inputs.

Analysis: The relevant MODVAT scheme distinguished between credit under Rule 57A, the preferential notional credit contemplated by Rule 57B for inputs sourced from the exempted sector, and the transitional relief under Rule 57H for inputs received before the dated acknowledgment of declaration. The governing distinction was that Rule 57B operated for a buyer who had already opted into the MODVAT scheme and purchased inputs with the benefit of the higher notional credit in mind, whereas Rule 57H was a transitional provision for inputs already in stock before the assessee obtained acknowledgment of the declaration. On the language of Rule 57H, the credit allowed was the duty actually paid on the inputs, and not the higher notional credit available under Rule 57B.

Conclusion: The benefit under Rule 57H was limited to the duty actually paid on the inputs lying in stock, and higher notional credit under Rule 57B was not available for such pre-declaration stock.

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